Multi-Year Guaranteed Annuity (MYGA)

MYGAs Overview

Client Risk Profile: Low

Protection Level: High

Funding Source: Cash, CDs, Fixed Income

Similar to a certificate of deposit (CD) or money market funds, a multi-year guaranteed annuity, or MYGA, offers complete downside protection against market fluctuations by guaranteeing a minimum rate of return for the duration of the investment. However, unlike CDs or money market funds, interest rates often are higher and assets grow tax deferred, allowing the possibility of greater accumulation over the life of the annuity. These simple, short-duration annuities, ranging from two to ten years, often are used by advisors as fixed income allocations.

Inside the MYGA Annuity: A Guide for Advisors

Evaluate MYGA annuity plans with a transparent, fiduciary-aligned approach to fixed income and retirement planning.

When interest rates are uncertain, locking in a guaranteed return becomes more than a defensive move.

A MYGA annuity allows advisors to offer a fixed rate for a defined period while preserving principal and reducing exposure to market swings.

What a MYGA Annuity Is and Where It Fits

A MYGA annuity is a type of fixed annuity that guarantees an interest rate for a set of years. For advisors, the MYGA annuity is typically used to provide stability within client portfolios while maintaining transparency around costs and outcomes.

They are commonly positioned for:

• Clients seeking principal protection.

• Investors comparing fixed income alternatives.

• Retirement portfolios requiring predictable growth.

• Situations where reducing volatility is a priority.

DPL’s platform focuses on no fee, no commission for MYGA structures, removing embedded compensation, and improving clarity for both advisors and clients.

How Does a MYGA Annuity Work?

• A client allocates a lump sum into the annuity contract.

• The insurer guarantees a fixed interest rate for a defined term (typically two to 10 years).

• Interest compounds on a tax-deferred basis.

• At maturity, the contract can be renewed, surrendered, or converted into income.

Because returns are fixed at purchase, the MYGA annuity provides certainty that is not dependent on market performance.

Key Features

• Fixed, guaranteed interest rates for the contract duration

• Principal protection backed by the insurer

• Tax-deferred growth

• Defined term structure (2-10 years)

• Commission-free design aligned with fee-based advisory models

These characteristics position the MYGA annuity as one of the more straightforward annuity structures.

Rates, Returns & Income

How MYGA annuity rates work

Rates for a MYGA annuity are set at the time of purchase and remain fixed throughout the contract term. This predictability allows advisors to incorporate MYGAs into planning with clearly defined return expectations.

When evaluating MYGAs, advisors should consider:

• Term length and duration

• Carrier-specific rates

• Contract features affecting liquidity

• Alignment with client time horizon

MYGA Annuity Rates by Term

Longer contracts often provide higher yields but require greater commitment.

For real-time comparisons, advisors evaluate available MYGA annuity rates across carriers within the platform’s MYGA Marketplace.

When reviewing a MYGA annuity, it’s important to look beyond the headline rate and evaluate how it fits within the broader client portfolio. While higher rates may be attractive, they are often paired with longer commitments or reduced liquidity.

Advisors should consider how the selected term aligns with anticipated cash flow needs, potential changes in interest rate environments, and overall portfolio duration. Looking across carriers often reveals meaningful differences, especially in liquidity terms and how rates are structured.

By evaluating each MYGA annuity within this broader context, advisors can better align product selection with long-term planning objectives rather than focusing solely on yield.

Why comparing MYGAs matters

Not all MYGAs are created equal, and the differences aren’t always obvious at first glance. Differences in rates, features, and carriers can significantly impact outcomes.

Using a centralized platform helps:

• Improve transparency

• Reduce product bias

• Support informed recommendations

Types of MYGAs

• Standard MYGAs with fixed rates

• MVA MYGAs with market value adjustments

• Liquidity-enhanced MYGAs offering more flexible withdrawal options

Each type balances yield, liquidity, and structure differently.

Benefits & Tradeoffs

Benefits

• Predictable, contractually defined returns

• Principal protection

• Alignment with fiduciary, fee-based models

• Simplicity compared to other annuity types

Tradeoffs

• Limited liquidity during contract term

• Surrender schedules

• No market participation

• Dependence on insurer credit quality

How Advisors Use the MYGA Annuity

Fixed income alternative

A MYGA investment can complement or replace traditional fixed income allocations. For clients seeking predictable returns without market price fluctuations, MYGAs offer a contractually defined alternative that can reduce reliance on bonds or rate-sensitive instruments.

Volatility management

MYGAs provide stability within diversified portfolios. By allocating a portion of assets to fixed, guaranteed-rate products, advisors can help dampen overall portfolio volatility and create a more balanced risk profile.

Laddering strategies

Staggered MYGA terms help manage reinvestment risk. By allocating across multiple durations, advisors should consider periodic liquidity while adjusting to changing interest rate environments over time.

Retirement planning

MYGAs can support future income strategies when combined with other annuity types. They are often used as a foundational component that can later transition into income-generating solutions, depending on client needs.

Applying MYGAs in practice

In practice, MYGAs are most effective when aligned with clearly defined client objectives. Advisors should assess:

• Suitability based on client time horizon

• Integration with overall portfolio strategy

• Transparency of product structure

• Alignment with fee-based compensation models

For example, shorter-term MYGAs may be appropriate when maintaining flexibility in uncertain rate environments, while longer-term contracts may be used to lock in yields and reduce future uncertainty.

A MYGA annuity can support portfolio segmentation strategies, where a portion of assets is dedicated to stable, predictable growth while other segments remain positioned for market participation.

DPL’s platform is built around this approach, giving advisors a way to compare no-fee, no-commission MYGAs across carriers without relying on product bias or embedded incentives.

Comparison to Alternatives

Advisors can also explore a broader range of annuity solutions within the platform’s annuity ecosystem, allowing for tailored portfolio construction across different client profiles.

When comparing MYGA insurance products to other options, the combination of fixed rates and tax deferral is often a key differentiator.

Support & Tools

Advisors also have many tools designed to improve evaluation and implementation:

• Use the annuity comparison tool to model outcomes.

• Compare real-time MYGA rates across carriers.

• Access platform support for product and implementation guidance.

Key Takeaways

• A MYGA annuity provides fixed, predictable returns over a defined term.

• MYGAs can support capital preservation and portfolio stability.

• Commission-free structures improve transparency.

• Comparing options across carriers is essential.

• MYGAs can complement broader retirement income strategies.

Frequently Asked Questions About Multi-Year Guaranteed Annuities

Disclosures:

Surrender charges, market value adjustments and other contract charges may apply that can reduce the principal.

Guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.

There are risks, fees and charges associated with fixed annuities.

The purchase of an annuity within a retirement plan that already provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefits. An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral. All annuity features, risks, limitations, and costs should be considered prior to recommending the purchase of an annuity within a tax-qualified retirement plan. In addition to surrender charges, withdrawals are subject to income tax.

Withdrawals prior to age 59 1/2 may also be subject to a 10% federal tax penalty.